Minimum Wage Hike to Increase Insurance Premiums

Saturday, June 30, 2007 | 0

The 2007 Texas Legislature recently ended its regular session and nonsubscriber interests survived numerous attacks.

Bills were defeated that would have:

* Prohibited voluntary or mandatory arbitration agreements, waivers of jury trial, and certain settlement agreements. * Added new information reporting requirements for nonsubscribers. * Created new discrimination and retaliatory discharge causes of action against nonsubscribers.

A bill to create a new Texas OSHA was also defeated. A committed group of nonsubscribing employers, working through the Texas Alliance of Nonsubscribers, did a phenomenal job of turning back AFL-CIO and trial lawyer attempts to curtail or add unnecessary or redundant regulation of nonsubscription.

A big "Thank You" is due the Alliance and its Advisory Board, which includes representatives from:

* Texas Association of Business * National Federation of Independent Business * Texas Retailers Association * Texas Self Insurance Association * Texas Hotel and Lodging Association * Texas Hospital Association * Texas Restaurant Association

The only bill directly applicable to nonsubscribers that did pass this session will require the Texas Department of Insurance to report once every two years to the Legislature regarding compliance of both subscribers and nonsubscribers with reporting requirements under the Texas Labor Code (like the nonsubscriber poster requirements, the annual filing of Form DWC-5 regarding nonsubscriber status/locations, and Form DWC-7 regarding lost-time, disease and death claims).

This is significant in that it will likely motivate TDI to step up their enforcement activity related to these important nonsubscriber requirements.

Fifty-eight workers' compensation bills were introduced this session. Some of the legislation moved swiftly through the process, including a bill that requires all doctors who provide workers' comp Peer Reviews to be licensed in Texas and one that mandates Designated Doctors and independent review physicians have Texas licensure. One pending piece of legislation is House Bill 2004. If signed by Governor Perry (before next Sunday's deadline), it will preclude Medical Doctors (MD s) and Doctors of Osteopathy (ODs) from reviewing the practice patterns of Chiropractors. This legislation will serve only to further the potential for abuses and over-utilization within the workers' comp system.

Minimum Wage Hike to Increase Workers' Comp and Nonsub Insurance Premiums

Workers' comp and nonsubscriber insurance premiums are typically computed as a rate per $100 of payroll. Now that Congress has approved the first increase in the federal minimum wage in nearly a decade, all employers with employees earning the minimum wage (or even close to the minimum wage) should consider the impact this change will have on their workers' comp and/or nonsubscriber insurance premiums.

This change in law may not only cause a premium increase on the next renewal, but may result in additional premium due upon the current year s payroll audit. The new law will boost wages for America's lowest-paid workers from $5.15 to $7.25 an hour over the next two years.

According to the Bureau of Labor Statistics, about 1.7 million workers, or 2 percent of the hourly workforce, were earning $5.15 an hour or less last year. About half were under age 25, and nearly three-quarters were employed in food preparation or other service jobs. Democrats contend the measure will lift the incomes of about 13 million workers -- 5.6 million who earn less than $7.25 an hour and 7.4 million people who earn slightly more but are likely to see their wages increase. There is a 3 step process in place to increase the minimum wage:

1. $5.85/hour, effective July 24, 2007 2. $6.55/hour, effective July 24, 2008 3. $7.25/hour, effective July 24, 2009

Form 5500 Filing Reminder

If your nonsubscriber injury benefit plan keeps its books and records on a calendar year basis (in other words, if your "plan year" ends on December 31), then your Form 5500 filing for 2006 is due on July 31, 2007.

This was reprinted with permission from the May edition of the Nonsubscriber Newsletter. It is printed by PartnerSource Inc. Its Web site is http://www.partnersource.com.

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The views and opinions expressed by the author are not necessarily those of workcompcentral.com, its editors or management.